Health insurance is increasingly difficult to afford. As reported in the 2018 Milliman Medical Index (MMI), the typical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan will have annual healthcare expenditures totaling approximately $28,166. Californians are not exempt from this trend, also paying increasingly high costs for their healthcare. According to the 2013 Berkeley Forum report, employer-sponsored health insurance premium rates were projected to nearly double from 2011 to 2022, ultimately reaching $31,728 for family coverage in 2022. Those premium increases will be borne by both employers and employees. According to the MMI, on average premiums are funded approximately two-thirds by employers and one-third by employees through payroll deduction.
Some good news for Californians is that they would likely be paying a lot more without managed care plans that use the delegated model. In brief, the term “delegated model” describes a health insurance plan where financial risk for healthcare services is transferred from an insurance company to healthcare providers (e.g., physicians or hospitals). Most commonly this involves the insurance company paying a fixed, per capita dollar amount (a capitation rate) to a group of physicians, and the physicians assume financial responsibility to provide all professional services for each health plan member. They may also have full or partial risk for hospital services provided to those same members. In California, capitation can only be used in health maintenance organization (HMO) plans. Other common types of plans, PPO-style plans and other fee-for-service (FFS) plans, cannot use capitation.
Measuring the impact of the delegated model on healthcare expenditures is tricky for at least two reasons. First, the average person who enrolls in an HMO plan might have a different health status from the average PPO/FFS plan enrollee. For example, they might be younger, or just healthier than average. Second, per capita healthcare costs vary by geographic area, for a variety of reasons. HMOs tend to be concentrated in urban areas, while PPO/FFS plans are prevalent in all areas of the state.
IHA Atlas data quantifies savings
Fortunately, data published by the Integrated Healthcare Association (IHA) allows us to compare per capita healthcare expenditures for HMO versus PPO/FFS plans, adjusted for differences in the mix of members by health status and by geographic area. Results indicate that for commercial health insurance plans (i.e., non-Medicare, non-Medicaid), total healthcare expenditures per capita are lower under HMO plans than under PPO/FFS plans, as shown in the graph below. They were 5% lower in 2013 and 7% lower in 2015.*
Milliman has announced the availability of its annual research into the financial results and administrative expenses associated with Medicaid managed care plans. This year’s report marks the 10th edition of Milliman’s research, and combines the financial and administrative analysis into one comprehensive report, including an in-depth examination of Medicaid managed care plans’ medical loss ratios (MLRs), administrative loss ratios (ALRs), underwriting ratios (UW ratios), and risk-based capital (RBC) ratios. The information is of significant value to the Medicaid industry as enrollment and revenue continue to increase year-over-year.
Observing the changes that have occurred in the Medicaid managed care landscape over the last 10 years provides valuable insight into the makeup of the market. We have made enhancements to this year’s report that help to highlight the growth in this industry and the ebb and flow of experience over time.
Key findings from the analysis include:
• The average underwriting gain of 0.9% in calendar year (CY) 2017 remained relatively stable from the composite gains observed in CY 2016
• During the past 10 years of our analysis, the data studied for the report has seen a 250% growth in membership and over 400% growth in revenue for the studied Medicaid managed care programs
• Administrative expenses continue to increase on a per member per month (PMPM) basis, but decrease as a percentage of revenue has been observed from CY 2016 to CY 2017
To see the Medicaid administrative expenses report, click here.
Opioid prescribing nationwide peaked in 2012 at over 80 prescriptions per 100 persons. Between 2012 and 2016, the prescribing rate decreased by almost 20%. Even after this decline, 19% of the U.S. population filled at least one opioid prescription during 2016.
As opioid prescribing declined, many doctors switched to other pain relief drugs. The change in prescribing patterns has potential implications for risk adjustment, because some of the drugs now being used for pain relief were previously flagged in pharmacy-based risk adjustment models as associated with high-cost conditions such as multiple sclerosis.
This brief by Christine Mytelka, Melanie Kuester, Colin Gray, and Lucas Everheart provides data on the decline in opioid prescribing and the increased use of other non-opioid pain relief drugs. Additionally, it addresses the corresponding effect that changing prescribing patterns may have on evaluating population health and risk-adjusted payments in risk-based managed care programs.
Social factors have a substantial impact on healthcare outcomes and spending, particularly with respect to lower-income populations. As the nation’s largest payer for healthcare services for lower-income populations, Medicaid is front and center when it comes to these issues. This report coauthored by Milliman’s John Meerschaert and Shelly Brandel identifies practical strategies that states can deploy to support Medicaid managed care plans and their network providers in addressing social issues.
This article was published by The Commonwealth Fund. Manatt’s Deborah Bachrach and Jocelyn Guyer and RTI International’s Sarah Meier also co-authored the article.
In this report, Milliman consultants summarize calendar year 2016 administrative costs of organizations reporting Medicaid experience under the Title XIX Medicaid line of business on the National Association of Insurance Commissioners (NAIC) annual statement. The primary purpose of the report is to provide reference and benchmarking information for certain key administrative expense categories used in the day-to-day analysis of Medicaid managed care organization (MCO) financial performance. It also explores the differences among various types of MCOs using available segmentation attributes defined from the reported financial statements.
This report by Milliman’s Jeremy Palmer and Chris Pettit summarizes calendar year 2016 financial results of organizations reporting Medicaid experience under the Title XIX Medicaid line of business on the National Association of Insurance Commissioners (NAIC) annual statement. The primary purpose of this report is to provide reference and benchmarking information for certain key financial metrics used in the day-to-day analysis of Medicaid managed care organization (MCO) financial performance. This report explores the differences among various types of MCOs using available segmentation attributes defined from the reported financial statements.